Always Look On The Bright Side Of Life | Daily Market Commentary with Jeffrey Halley
A bit of Monty Python is chicken soup for the soul, and provides some welcome grounding about the state of the world, in the seemingly never-ending procession of impending doom that has characterised 2019. Although Brian was about to be crucified, not a great start to anyone’s day, he still managed to reflect that life wasn’t as bad as it looks, and that it was essential to also look on the bright side of life.
For a start, US earnings season is in full swing, and, with the exception of Boeing, which keeps giving itself sell-induced engine failures, earnings have been pretty good from most heavyweights. McDonald’s results today should be a happy meal, and I would expect Microsoft and Amazons results tomorrow to provide a nice upsize. Perhaps this is why 2019’s great contradiction, the S&P 500 being within sniffing distance of record highs isn’t such a contradiction after all?
President Trump’s great and unmatched wisdom also noted today that talks about getting trade-deal mini over the line were progressing well. Many readers will point out that there is a massive contradiction embedded in the previous sentence, fair call. But if President Trump is correct, it will be a welcome early Christmas present for beleaguered markets ex-USA.
Brexit progress was confounded again as the Parliamentary Speaker John “Judas” Berkow refused to allow PM Johnson’s Brexit agreement to be tabled yet again for another attempted meaningful vote. Undeterred, the Prime Minister has also chosen to look on the bright side of life, and push for the Withdrawl Agreement Bill (WAB) to be passed by Parliament this week instead. The voting bean counters in Westminster suggest that the government finally has the numbers to make it happen. Imperfect though it is, an agreement passing into law is a positive for both Britain and Europe. A hard Brexit likelihood is receding by the day, although trying to ponder all the connotations to come requires lying down with a cold towel on your head.
In other news, the author and Mrs Halley have bought a house in New Zealand today. A cynic might say the top of the global real estate market is now in place. A glass half full approach might say that if such a wise commentator on the worldwide economy is buying property, that is a massive vote of confidence in the world for 2020. Readers may decide at their discretion.
Japan is on holiday today for Enthronement Day, which will likely mean a quiet day for regional markets. The tone, though, should remain underlyingly positive after developments overnight. Asia’s data calendar is also a bare cupboard today meaning the region will be content to bask in the positive vibrations from Europe and the United States overnight.
I’ll leave the final words to Monty Python.
“When you’re chewing on life’s gristle,
Don’t grumble, give a whistle!”
Wall Street enjoyed a positive day, bolstered by trade talk hops and continued positive earnings releases. The S&P 500 rose 0.69% and the Nasdaq rose 0.91%. The Dow Jones was weighed down by Boeing’s continued travails but still gained 0.21%.
Asia stock markets have begun positively with both the Kospi and ASX 200 higher by 1.0% and 0.30% respectively. A Japanese holiday will limit activity in the region today, but the regional stock markets should continue to benefit from Wall Street’s tailwind.
Treasury yields edged higher overnight lending some support to the US dollar, but the British pound (GBP) remained the centre of currency traders’ attention.
The pound rose initially to 1.3010 but fell back after the parliamentary Speaker declined to allow another attempt at a meaningful Brexit vote. The pound found support though around 1.2950 as the government decided to press on with passing Brexit legislation instead.
The GBP has found some resistance at 1.3000 for now, until we see the result of voting, or amendments to the legislation. That said, Brexit optimism means the pound appears to be well supported on any dips towards 1.2900 for now.
A Japan holiday will mute FX volumes in Asia today unless we get a surprise headline or two.
Oil had a sideways session overnight, shrugging off news that Russia had exceeded its OPEC+ target last month. The cause was more technical than deliberate, caused by Russia ramping up gas condensate for the winter session of which some oil is a byproduct.
Brent crude fell 0.60% to $ 59.00 a barrel, and WTI fell 0.50% to $53.60 a barrel. Although worries persist over the global economy dampening demand, oil markets appear to have moved to a wait and see mode rather than outright bearish.
Gold fell 0.40% to $1484.50 an ounce in a quiet session overnight as treasury yields, and the dollar firmed. Support remains at $1474.00 an ounce initially, with a daily close below this level signalling deeper losses.
Overall gold continues to remain a peripheral attraction as most of the action plays out in different corners of the market.